Fannie Mae will allow qualified renters to sign month-to-month leases and stay on in homes it forecloses on — without requiring a security deposit, credit check or payment history — while it markets the homes for sale.

Fannie Mae will allow qualified renters to sign month-to-month leases and stay on in homes it forecloses on — without requiring a security deposit, credit check or payment history — while it markets the homes for sale.

The new National REO Rental Policy is intended to limit the disruption to the lives of renters when their landlord is foreclosed on, and "bring a measure of stability to communities impacted by high foreclosure rates," said Fannie Mae Chief Operating Officer Michael Williams in a statement.

Freddie Mac is reportedly developing a similar policy. Fannie Mae’s program applies only to renters — not the owner of the property or their immediate family — and requires that homes meet state laws and local code requirements for a rental property.

All types of single-family property are eligible for the program, including two- to four-unit properties, condos, co-ops, single-family detached homes and manufactured housing. Properties with loans insured by FHA will require approval from the Department of Housing and Urban Development (HUD).

Rents will be set at market rate by reviewing local comparable rents, conducting a neighborhood survey, or using "other relevant indicators," Fannie Mae said. Properties will be managed through a real estate broker or a property management company, which will be required to coordinate property repairs and respond to any property safety issues.

After a foreclosure is complete, renters will be offered a "Cash for Keys" incentive payment to vacate the property, or have the option of signing a new month-to-month lease with Fannie Mae.

In late November, Fannie Mae and Freddie Mac suspended the process of evicting about 16,000 troubled borrowers or selling their homes while they implemented a streamlined loan modification program intended to prevent foreclosures (see story).

Fannie Mae announced last week it was extending the suspension of foreclosure sales and evictions through Jan. 31. The company said Tuesday that the new National REO Rental Policy will be fully in place by the time the suspension is lifted.

***

What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription